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Grand Prix's economic impact might never be known

Auto RacingLabor DayPublic Officials

Baltimore residents might never know how much money the city's second Grand Prix race generated or how it affected local hotels, restaurants and other businesses.

A spokesman for Mayor Stephanie Rawlings-Blake said Tuesday that the city would not commission an economic impact study of this year's Labor Day weekend event, as it did last year for the inaugural racing festival. City and racing officials also said they might not publicly reveal the number of spectators; last year 160,000 people attended over the three days.

Even the tax revenue the city reaped may not be known for as long as two months, city and state officials said.

Last year's economic impact "study confirmed what we know is an undisputed fact and that is the event has a significant positive economic impact," spokesman Ryan O'Doherty said. "That debate is over."

Race On Baltimore — the group that took over the event after two previous organizers collapsed — had warned that it expected fewer attendees than last year because the group had only about three months to plan and promote the event.

Crowds were smaller and fewer grandstand seats were filled at this year's race, which wound through two miles of downtown streets. But a reconfiguration of grandstands and festival space, in part for better crowd control, complicated direct comparisons. Neither city officials nor Race On organizers have given a count of attendees.

O'Doherty said the city would disclose the number of attendees "if and when" Race On provided that information to them.

Race On's general manager, Tim Mayer, said Tuesday that he did not plan to make that information public.

"We're a private company," said Mayer. "We're not planning on announcing our financials. We don't want people counting our money, and I'm sure the city doesn't want us counting their money."

Following the financial debacle wrought by Baltimore Racing Development, the organizers of last year's race, the city stipulated that Race On must divert the admissions and amusement tax that it owes to the city into a "lock box" account.

Baltimore Racing Development took a full year to pay the city the tax, which amounts to 10 percent of total ticket sales. The company also failed to pay millions of dollars of debts to state agencies and private contractors.

The leaders of Race On have paid the city a $300,000 fee and $50,000 to be distributed to community organizations near the race course. They also say that they have paid their contractors on time.

Caron Brace, a spokeswoman for State Comptroller Peter Franchot, confirmed that Race On established an account to ensure payment of the admissions and amusement tax. The comptroller's office collects the tax and then passes the proceeds on to the city.

Brace said the total would be due by the end of October, but she said her office would not disclose the amount. "It's ultimately up to Baltimore to disclose it," Brace said.

O'Doherty said the city would release the amount of tax proceeds after the comptroller's office transferred the funds.

Baltimore Racing Development owed the city about $440,000 in admissions and amusement taxes last year, but that figure ballooned to more than $560,000 with late fees and interest. The state comptroller's office publicly announced the amount that Baltimore Racing Development owed when it placed liens against the company's managers.

The city-commissioned economic impact report indicated that the race generated $47 million last year. That figure included $28 million in direct spending by spectators, promoters and vendors, as well as the ripple effect created by that revenue.

The study said that about 160,000 people attended the race and 110,000 tickets were purchased over the three days. The city and racing officials gave away tens of thousands of tickets.

Dennis Coates, an economics professor at the University of Maryland Baltimore County, said he was not surprised that the city did not commission a second economic impact study.

Coates, who specializes in sports economics, conducted his own study last year that showed the event generated about $25 million in spending, including about $10 million which would have likely been spent in the city or state even if there had not been a race. Coates based his study on surveys of race-goers.

"They can rewrite history and they can claim pretty much anything because no one else will see the hard numbers," said Coates. "It's better to not do an economic impact study than have unflattering numbers."

The mayor's office called Coates' study flawed. The city spent about $800,000 to provide services for the race, such as fire and police protection. Rawlings-Blake also invested about $7 million to prepare the streets for the race last year.

Downtown restaurants reported bustling sales over this Labor Day weekend, although not at as fast as last year's pace. Owners and managers said the bump in sales more or less evened out slumping sales in the weeks leading up the race, as concrete barriers and metal fencing obscured views and hampered pedestrian access.

julie.scharper@baltsun.com

twitter.com/juliemore

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